Stock futures slip after Trump appears to crack down on China’s Huawei

Stock futures edged higher Thursday, erasing modest losses seen after U.S. President Donald Trump appeared to target China telecommunications group Huawei with an emergency declaration against threats to U.S. technology — potentially adding to trade tensions between the world’s two largest economies.

What drove the market?

The Trump administration appeared to fire a fresh salvo in a trade spat with China late Wednesday, issuing an executive order that bans telecom equipment from countries considered “foreign adversaries”. The move seemed all but targeted at Huawei, which has been under pressure from the White House for months. The Commerce Department will have 150 days to figure out regulations.

A spokesman for China’s Commerce Ministry said the country opposes other countries imposing unilateral sanctions on Chinese entities and that Washington should avoid further affecting Sino-U.S. relations, Reuters reported. The spokesman also said he had no information on plans for a U.S. trade delegation to visit China, the report said.

The tussle comes against the backdrop of trade tensions between the U.S. and China that have triggered volatility across global equity markets. Huawei responded to CNBC that such a move will only put the U.S. behind when it comes to 5G development, given the Chinese tech giant is the “unparalleled leader” in the field, it said.

The executive order came after markets Wednesday received a lift from reports that Trump would delay a decision on instituting new tariffs on car and auto part imports for up to six months. Hours earlier, Treasury Secretary Steven Mnuchin said the U.S. would “most likely” meet with Chinese delegates again in Beijing after each side fired off trade tariffs at the other.

Some budding optimism over trade relations between the two countries has offered some reprieve to investors this week, with the S&P 500 now higher for two-straight sessions after last week’s sharp losses.

Away from geopolitical developments, Thursday’s economic calendar includes weekly jobless claims, housing starts and building permits for April, along with a Philly Fed manufacturing index for May — all due at 8:30 a.m. Eastern Time.